Iraq and Gulf Analysis

Archive for October 29th, 2010

For Sale: Al-Iraq (Market Update)

Posted by Reidar Visser on Friday, 29 October 2010 12:28

This week has seen some interesting comments to the press by the Kurdish politician Mahmud Uthman on the progress of the discussion of the Kurdish demands, plus a meeting last night of the all-Shiite National Alliance. Both items put us in a better understanding to understand supply and demand mechanisms related to the auctioning-off of a country called Iraq, expected to take place over the coming weeks.

Venue: The souk in Arbil, the capital of the Kurdistan Regional Government. It is interesting that some limited reactions to all this Kurdish king-making business are beginning to materialise in the rest of Iraq, with some calling for the event to take place in Baghdad instead. However, most Iraqi politicians don’t seem to care. A preparatory meeting is scheduled for Sunday.

Condition: Some wear and tear but still an incredible potential. Iraq is be auctioned off in pieces: Most buyers totally adore the piecemeal approach. The sellers have a lot in common but hate each other too much to establish a cartel; accordingly it’s a buyer’s market.

Time: TBD, but interested buyers are expected to hang around all next week and probably longer.

Main international participants: Iran, Turkey. The US delegation has been delayed due to the 2 November midterm elections but has expressed a strong interest; it is expected to show up some time next week.

Sellers:

1. ISCI. “We sell everything”. Has agreed to all 19 demands presented by the buyers and would readily give more. Ideas to consider if there is competition from other sellers:

20. The principle of balance should be adopted with regard to the issuing of postage stamps and coins, with due representation of all the components of the Iraqi people.

21. The foreign ministry should be abolished and be replaced by the Supreme Federal Commission of Foreign Policy, with sub-committees consisting of representatives of the regions and governorates affected by foreign policy questions.

22. The government is automatically considered resigned if the president of the Kurdistan Regional Government one morning wakes up and feels a preference for a change in government. In keeping with the principle of democracy and the inviolable basic tenets of Islam, this option applies to weekdays only. If the president wakes up with this feeling on a Friday or Saturday, he must either stay awake until the next weekday, or, if he elects to go to sleep again, must wait until the feeling resumes on a weekday.

Whereas ISCI has specialised in customer satisfaction – “the customer is always right” – a problem relates to its real share of the market. At yesterday’s meeting of the National Alliance, both Fadila and Badr representatives were present, meaning that the rump of ISCI may be no more than 10 deputies. That means the potential combination of ISCI, Iraqiyya and the Kurds could be less than the 163 deputies needed to clinch a deal.

2. The National Alliance. According to Mahmud Uthman, the NA agrees to 18 out of 19 of the buyer’s conditions, excepting the Kurdish demand that the government be considered automatically resigned if the Kurds detect a violation of the constitution (this they do quite often). The main problem relates to trust. The NA politicians have said these things in the past and have failed to deliver. For that reason, the Kurds are still interested in maintaining links with a group of suppliers. It is noteworthy that Iran is interested as a  “single buyer” for Iraq if NA is the supplier; if this does not work it would prefer something involving as much decentralisation and administrative weakness as possible.

3. Iraqiyya. So far, the only group to present certain limited objections to the buyer’s conditions. According to Uthman, these relate to the Kurdish demand that Baghdad finance the Peshmerga militia; article 140 on disputed territories and the Kurdish demands for keeping the presidency. The two first of these are eminently understandable, but the third is not. Iraqiyya is committing a major mistake by insisting on the presidency since it will be a powerless office until a change of its constitutional prerogatives has been confirmed by a referendum, by mid-2011 at the earliest. If the Kurds want it for symbolic power, Iraqiyya should give it to them and instead focus on real issues. One glaring lacuna, of course, is opposition by Iraqiyya to the draft oil and gas law, which in its current shape, if adopted, might signify the death of Iraq as a recognisable state entity. Still, they may of course opt to rely on parliamentary opposition to the bill, which will probably be massive once a debate on its contents gets going.

The conundrum for the Kurdish buyers: Abd al-Mahdi/ISCI/Iraqiyya may be more prepared to stick to the letter of any deal, but there are problems relating to the ability to deliver (i.e. number of deputies in the parliament) and technical and logistical issues (the false premise of the legality of enhancing the powers of the presidency without a referendum, which is constitutionally impossible.) On the other hand, Maliki and the National Alliance may be in a better position to deliver, but to what extent they will provide the desired quality and live up to buyer expectations is a different matter.

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